Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

Need a little legal ammo? Search for caselaw on legal theories and defenses here:

Loading...

Monday, July 11, 2011

Takings / inverse condemnation claims: When is the govermental entity immune?



Dallas Court of Appeals analyzes the current state of the law on governmental takings



Dallas City Hall
The City of Dallas v. CKS Asset Management, Inc.  



The Texas Constitution provides that “[n]o person's property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation . . . .” Tex. Const. art. I, § 17(a). Therefore, to establish a takings or inverse-condemnation claim, a claimant must show: (1) an intentional act by the government (2) in a taking of the claimant's property (3) for public use. State v. Holland, 221 S.W.3d 639, 643 (Tex. 2007); see also City of Dall. v. VRC, LLC, 260 S.W.3d 60, 65 Tex. App.-Dallas 2008, no pet.) (inverse condemnation); Brownlow v. State, 251 S.W.3d 756, 760 (Tex. App.-Houston [14th Dist.] 2008) (claimant must also have compensable interest in the property at issue), aff'd, 319 S.W.3d 649 (Tex. 2010). By this express constitutional waiver, governmental immunity does not shield a municipality from an action for compensation under the takings clause. Sw. Bell Tel., L.P. v. Harris Cnty. Toll Rd. Auth., 282 S.W.3d 59, 61 (Tex. 2009). Whether particular facts are sufficient to constitute a taking is a question of law. Brownlow, 251 S.W.3d at 760.

Friday, July 8, 2011

Robosigners Beware: Texas AG Greg Abbott brings suit against Midland Funding, Midland Credit Mgmt, and Encore Group,Inc. for submitting fraudulent mass-produced affidavits in credit card debt suits against tens of thousands of Texans

 
Also see --> Subsequent Texas AG Enforcement Action against Debt Collectors

No new opinions from the Texas Supreme Court this Friday, but the AG is bound to make news instead by suing Midland Funding LLC, Midland Credit Management, Inc. and Encore Capital Group, Inc. for using robo-signed affidavits and obtaining thousands of default judgments for breach of contract without producing the contracts or much else, relying instead on false affidavits to establish their credit card debt collection claims, which were bought in bulk and with little or no documentation from major card issuers.

The lawsuit was filed by the Texas Attorney General on behalf of the State of Texas and in the public interest in Harris County earlier today and was randomly assigned to Hon. Josefina Rendon, presiding judge of the 165th District Court. The petition against the Midland entities and their corporate parent alleges violations of the DTPA and the Texas Debt Collection Act (TDCA). It seeks injunctive relief in addition to substantial monetary penalties and restitution [disgorgement] of funds collected by fraudulent means from victimized consumers.


The Texas Debt Collection Act is the state-law counterpart to the federal FDCPA and is part of the Texas Finance Code. It has a tie-in with the Texas DTPA (Deceptive Trade Practices Act).

This is not the first consumer protection lawsuit by a state attorney general against a major debt collector/assignee of charged-off credit card debt.

In March 2011, Minnesota's Attorney General, Lori Swanson, also brought an action against Midland for defrauding Minnesota courts and citizens by filing false and deceptive “robo-signed” affidavits—generated at its offices in St. Cloud, Minnesota—to collect on old consumer debts that it purchased from credit card companies and others for about three cents on the dollar.


Portal of Modern Harris County Civil Courthouse
(which houses probate, county, and district courts)
Excerpts from the Original Petition in State of Texas vs. Midland et al, filed in Harris County District Court Friday, July 8, 2011. 

NO. 201140626

STATE OF TEXAS, Plaintiff,

v.

MIDLAND FUNDING LLC, MIDLAND CREDIT MANAGEMENT, INC., and ENCORE CAPITAL GROUP, INC., Defendants.

IN THE DISTRICT COURT OF HARRIS COUNTY, TEXAS
[165th] JUDICIAL DISTRICT

PLAINTIFF'S ORIGINAL PETITION
AND APPLICATION FOR TEMPORARY AND PERMANENT INJUNCTION

TO THE HONORABLE JUDGE OF SAID COURT:

Plaintiff the STATE OF TEXAS, acting by and through Attorney General of Texas Greg Abbott, complains of MIDLAND FUNDING, LLC, MIDLAND CREDIT MANAGEMENT,INC., and ENCORE CAPITAL GROUP INC., Defendants, and for cause of action would respectfully show as follows:

[...]

IX. FACTUAL BACKGROUND
9.1 Defendants are one of the largest third party consumer debt collector companies in the country. Defendants purchase large portfolios of consumer debts from issuers of consumer credit such as VISA, Mastercard, Bank of America, Bank One, and Citibank, comprising millions of consumer accounts, such as credit card debts and defaulted auto loans and cellular phone plans.

Defendants pay pennies on the dollar for these accounts. In 2010 alone, Defendants paid $362 million to acquire consumer debt portfolios with a face value of $10.9 billion for an average price of approximately 3.3 cents per dollar of debt acquired. For 2010 alone, Defendants reported -$49 million in profits. Every year, Defendants purchase hundreds of thousands of accounts involving Texas consumers.

9.2 When Defendants purchase these consumer debt portfolios, generally these accounts have been "charged off' by the original creditors. The original creditors or their agents have exhausted their own debt collection efforts and determined that the account needs to be "charged off', which allows for the creditor to take the loss as a tax deduction.

9.3 The electronic portfolios of these charged off accounts acquired by Defendants contain limited categories of information about the debt. Typically, Defendants do not acquire the underlying credit agreements, payment history, or statements (or "media") but retain the right to purchase the documentation from the original creditor at a later date.

9.4 Defendants' collection activities prefer "efficiency" and profits over compliance with Texas debt collection laws. Defendants chum out millions of collection letters and millions of telephone calls from its call centers in Arizona, Minnesota and India, often using incomplete and/or inaccurate electronic information purchased from original creditors. Consumers complain Defendants have targeted the wrong person for collection or are attempting to collect debts that have been fully or partially paid or settled. Consumers also complain that Defendants pursue them for collection of old debts for which they do not have any records and are beyond the statute of limitations and credit reporting periods. Defendants' form collection letters contain very little information about the debt, no supporting documentation, and no proof that ownership of the debt has been transferred to Defendants. When a citizen contacts Defendants to dispute a debt or the amount of the balance owed, or to ask for additional information, little or nothing is done to investigate or verify the legitimacy of the debt.

9.5 Consumers complain that when they tell Defendants they do not owe the debt Defendants refuse to provide documentation to verify the debt and turn the tables on the consumer to prove the debt is not owed or not owed in the amount alleged. Consumers complain that this practice has resulted in loss of credit rating, inability to refinance their homes, and even loss of job opportunities, in addition to the aggravation of being harassed by a debt collector who refuses to verify the debt. Some consumers pay Defendants just to avoid a false report to the credit reporting agencies or avoid the harassment of a lawsuit. The Better Business Bureau reports that over 15,000 consumers have filed complaints regarding Defendants' collection practices.

Typical Midland Affidavit from a
more recent case [not from AG's law suit]
Robo-Signed Affidavits.


9.6 When a consumer does not respond to collection efforts, Defendants may refer the account to law firms to file a lawsuit on their behalf. Since 2002, Defendants have filed over 60,000 debt collection lawsuits in Texas courts.

9.7 These lawsuits vary slightly depending upon the law firm that is engaged by Defendants; however, typically Defendants' debt collection lawsuit includes a boilerplate form petition, with Midland Funding as named plaintiff, for breach of contract and makes demand for principal, interest, costs, and attorneys' fees. The petition often contains gross errors such as alleging (falsely) that Midland Funding sold goods or services to the consumer, or stating that a copy of the credit agreement is attached to the petition (but is not). The boilerplate petition contains requests for admissions that often include obviously false statements or self-serving legal conclusions such as admit or deny

• that true and correct copies of the terms and conditions of the use of the credit account are attached to the Original Petition (no such terms and conditions are attached);

• that the plaintiff [Midland Funding] extended credit to the consumer (which is contradicted by the face of the petition which states that Midland Funding is the assignee of the original creditor);

• that defendant [the consumer] has no defense to this suit, and judgment should be granted as prayed for;
• that plaintiff should be awarded reasonable attorney's fees;

• the affidavit attached to the petition is fully legal and correct.

9.8 Defendants typically attach a one page form "affidavit" or sworn statement to the petition. Under Texas law an affidavit is a written, factual statement signed by the person making it, sworn to before an officer authorized to administer oaths, and officially certified by the officer under seal of office. Tex. Gov't Code §312.011(l). The affidavit must show that it was made by a person who is competent to testify. Tex. R. Evid. 601(a). The affidavit must be based on the affiant's personal knowledge and must state that the facts in it are true. Tex. R. Evid. 104(b), 602. If statements made in an affidavit are false, they may be grounds for perjury.

9.9 A typical mass-produced form affidavit used by Defendants against Texas citizens prior to 2009 is called a "Form 425 (Texas) Affidavit." (A sample is attached as Ex. A hereto.) In Form 425, the affiant swears under oath (i) that the affiant has ''personal knowledge" of the "facts herein" from his or her review of records of Midland Credit Management, (ii) that the underlying "claim" is "within the personal knowledge" of the affiant, and (iii) that the affiant has "personal knowledge of relevant financial information" concerning the underlying account, including that the defendant failed to make payments on the account, that demand has been made, and that the affiant retained attorneys in the case to collect the debt.

9.10 These form affidavits attached to Defendants' form petitions are used by Defendants to "prove up" the debt when moving for default judgment or summary judgment against the consumer. In granting default judgment or summary judgment in a liquidated damages case, the courts rely upon affidavits as evidence that the plaintiff has actually verified the debt is owed by the consumer who is being sued, that the balance owed is correctly stated, and that any interest or other charges are correctly stated according to the underlying credit agreement.

9.10 From 2002 through 2009, it is undisputed that Defendants filed thousands of false affidavits in their collection suits throughout Texas. Three Midland Credit employees have testified in depositions that during their employment, they signed 300 to 400 form affidavits per day at their offices in Minnesota, that they did little to nothing to review the contents of their affidavits before signing, that they did not review any documentation regarding the account before signing, that they did not review any exhibits before signing, and that they did not sign the affidavits before a notary. They also testified that they did not have any contact of any kind with the debtor. One employee testified that he simply picked up stacks of affidavits off of the computer, signed them (hundreds at a time) and forwarded them to the notary for signature and to be mailed to the law firm filing the lawsuit. The employees/affiants also testified that they had no knowledge about the sale of the debt portfolios from the original creditors to Midland Funding, how Midland Funding came to be the successor in interest on the debt, or how Midland Funding retained its attorneys (although they attest to having personal knowledge in their affidavits).

9.12 The end result of these robo-signed affidavits is that the default judgments and summary judgments entered by the courts are based on affidavits that are false. The courts are misled into concluding that the affiant has actually verified the debt, the correct balance owed, the interest rate that is applicable, and the identity of the debtor, when in fact none of it has been verified by the affiant. Since approximately 90% of all of Defendants' collection cases result in a default judgment against an unrepresented person, the affidavits themselves are rarely challenged. These mass-produced judgments are then used by Defendants as leverage against unrepresented individuals.

9.13 Thus, for years, Defendants have affirmatively and systematically deceived the Texas courts and undermined the fairness of the justice system on a massive scale. Through Defendants' illegal practices, a great deal of the State's judicial resources have been expended helping the Defendants to obtain dubious judgments based on incomplete information and supported by false and fraudulent affidavits. Defendants use these fraudulent affidavits as leverage against consumers, taking unfair advantage of their lack of knowledge about their legal defenses. The practical end result of Defendants' scheme is that Defendants are asserting judgment liens against Texans which were fraudulently obtained and in some cases were obtained against individuals who complain they do not owe the debt at all or owe an amount that is less than the amount of the judgment.
[...]
X. FALSE, MISLEADING, AND DECEPTIVE ACTS
AND PRACTICES
10.1 Defendants, in the course of acts and/or omissions as alleged above, have in the course of trade and commerce engaged in false, misleading, and deceptive acts and practices declared unlawful in §17.46(a) and §§17.46(b) of the DTPA. Such acts include:

A. Engaging in false, misleading, or deceptive acts in the conduct of any trade or commerce, as alleged more specifically herein, in violation of § 17.46(a) of the DTPA;

B. Causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services, as alleged more specifically herein, in violation of § 17 .46(b) (2) of the DTP A;

C. Causing confusion or misunderstanding as to the affiliation, connection, or association with, or certification by another, as alleged more specifically herein, in violation of §17.46(b)(3) of the DTPA;

D. Representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve or which are prohibited by law as set forth herein in violation of §17.46(b )(12) of the DTPA.
 
XI. VIOLATIONS OF THE TEXAS FINANCE CODE

11.1 Defendants, in the course of acts and/or omissions as alleged above, have engaged in acts in violation of Tex. Fin. Code §392.404. Such acts include:

A. Misrepresenting the character, extent, or amount of a consumer debt in violation of Tex. Fin. Code §392.404(a)(8);

B. Representing that a consumer debt may be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if a written contract or statute does not authorize the additional fees or charges in violation of Tex. Fin. Code §392.404(a)(12) ;

C. Using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer in violation of Tex. Fin. Code §392.404(a)(19).

NOTE: The Attorney General's Original Petition and Application for injunctive relief can be accessed by following the link provided in the press release announcing the civil action against debt buyers/collectors Midland and Encore on the OAG's website. A snippet from the announcement with hotlinked title follows below. The Harris County District Clerks online docket management system does not reflect a date for a temporary injunction hearing:

Friday, July 8, 2011
Attorney General Abbott Charges Encore Capital Group with Violating Texas Debt Collection Laws 

State’s enforcement action cites Encore for employing unlawful tactics against debtors, relying upon “robo-signers” to sign thousands of false affidavits

HOUSTON – Texas Attorney General Greg Abbott today charged Encore Capital Group, Inc. with falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information, and employing unlawful and deceptive debt collection tactics. The State’s enforcement action cites the defendants for committing multiple violations of Texas debt collection laws and the Texas Finance Code. Encore, which is one of the nation’s largest debt collection companies, and its subsidiaries – Midland Funding, LLC and Midland Credit Management, Inc. – are named as defendants in the case.

According to state investigators, Midland Funding purchased debt portfolios from a broad spectrum of creditors for pennies on the dollar. As the purchaser of the debt, the defendants attempted to collect the money that was allegedly owed to various creditors. However, the defendants’ debt collection letters contained very little information about the debt they were attempting to collect, provided no supporting documentation, and included no proof that they actually acquired the debt from the original creditor. When Texans contacted the defendant to dispute the legitimacy of an alleged debt or seek additional information, the defendants made little or no effort to investigate or verify whether their collection efforts were proper.

MEDIA RESPONSE

to Texas Attorney General Greg Abbott's Judicial Enforcement Action against Encore Group, Inc, Midland Credit et al  so far (as of Friday 6PM)

Texas Charges Encore Capital with Breaking State Debt Collection Laws

KUHF-FM - Andrew Schneider - ‎39 minutes ago‎

Texas Attorney General Greg Abbott is charging Encore Capital Group, as well as subsidiaries Midland Funding and Midland Credit Management, with violating Texas' debt collection laws. Andrew Schneider has more. Attorney General Abbott is charging the ... Debt collector Encore sued by Texas

Thomson Reuters News & Insight - ‎2 hours ago‎

NEW YORK, July 8 (Reuters) - Encore Capital Group Inc was sued by the state of Texas on allegations it used illegal and deceptive tactics to collect debts from consumers. Greg Abbott, the state attorney general, announced the lawsuit three days before ... Debt-collection firm faces accusations from state

Austin American-Statesman (blog) - ‎2 hours ago‎

By American-Statesman Staff
Friday, July 8, 2011, 03:10 PM Texas Attorney General Greg Abbott has accused one of the nation's largest debt-collection companies of committing multiple violations of the state's debt collection laws and the Texas ... Debt Collector Charged by Texas Attorney General's Office for Violating State ...

News/Talk 790 KFYO - Cole Shooter - ‎3 hours ago‎

A debt collection group and its subsidiaries have been charged with violating Texas' debt collection laws. Texas Attorney General Greg Abbott today charged Encore Capital Group and subsidiaries Midland Funding, LLC and Midland Credit Management with ... Texas AG files suit against debt collector

Legal News Line - Bryan Cohen - ‎3 hours ago‎

HOUSTON (Legal Newsline) - Texas Attorney General Greg Abbott charged Encore Capital Group on Friday with state debt collection law violations. The alleged violations include attempting to collect debts based upon inaccurate or ... Attorney General Charges Debt Collector

Examiner.com - ‎5 hours ago‎

HOUSTON – Texas Attorney General Greg Abbott today charged Encore Capital Group, Inc. with falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information, and employing unlawful and deceptive ... Encore Capital Group Accused of Falsifying Affdavits (ECPG)

Investor's Business Daily - ‎5 hours ago‎

Jul 08, 2011 (SmarTrend(R) News Watch via COMTEX) -- Texas Attorney General Greg Abbott charged Encore Capital Group (ECPG) with falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information ...

TEXT OF TX ATTORNEY GENERAL'S PRESS RELEASE ANNOUNCING LAW SUIT AGAINST MIDLAND AND ENCORE CAPITAL GROUP FOR DECEPTIVE DEBT COLLECTON PRACTICES INVOLVING FRAUDULENT AFFIDAVITS

Friday, July 8, 2011

Attorney General Abbott Charges Encore Capital Group with Violating Texas Debt Collection Laws
State’s enforcement action cites Encore for employing unlawful tactics against debtors, relying upon “robo-signers” to sign thousands of false affidavits

HOUSTON – Texas Attorney General Greg Abbott today charged Encore Capital Group, Inc. with falsifying and robo-signing affidavits, attempting to collect debts based upon inaccurate or incomplete account information, and employing unlawful and deceptive debt collection tactics. The State’s enforcement action cites the defendants for committing multiple violations of Texas debt collection laws and the Texas Finance Code. Encore, which is one of the nation’s largest debt collection companies, and its subsidiaries – Midland Funding, LLC and Midland Credit Management, Inc. – are named as defendants in the case.

According to state investigators, Midland Funding purchased debt portfolios from a broad spectrum of creditors for pennies on the dollar. As the purchaser of the debt, the defendants attempted to collect the money that was allegedly owed to various creditors. However, the defendants’ debt collection letters contained very little information about the debt they were attempting to collect, provided no supporting documentation, and included no proof that they actually acquired the debt from the original creditor. When Texans contacted the defendant to dispute the legitimacy of an alleged debt or seek additional information, the defendants made little or no effort to investigate or verify whether their collection efforts were proper.

Court documents filed by the State indicate the defendants sometimes even used incomplete or inaccurate account information, targeted the wrong individuals for collection and attempted to collect debts that had been fully or partially paid. As a result, some Texans unnecessarily suffered financial hardships, such as improperly decreased credit ratings, loss of job opportunities or the ability to refinance their home.

When individuals refused to comply with Midland Funding’s improper collection efforts, the defendants hired attorneys to sue the accused debtors. Court documents reveal that the defendants’ lawyers filed breach of contract lawsuits demanding principal, interest and attorneys’ fees. The defendants have filed more than 60,000 lawsuits in Texas since 2002. According to state investigators, the defendants’ lawsuits contained inaccurate information and used false statements to claim they were owed certain debts.

To protect Texans from being sued for debts they did not actually incur, the law may require that debt collectors verify the validity of their claims through “sworn affidavits.” However, the defendants submitted falsified affidavits, which the courts relied upon as proof that the debt collector properly verified the identity of the debtor and the amount owed.
The State’s investigation revealed that the defendants also employed “robo-signers” to supply the legally required verification. Court documents filed by the State indicate the defendants’ robo-signers routinely signed more than 300 affidavits per day and did not actually review the underlying credit agreements or the alleged debtor’s payment history. In sworn testimony provided to state investigators, the defendants’ robo-signers acknowledged that they also had no personal knowledge of the original debt or the defendant’s acquisition of the debt portfolios – which was contrary to the information contained in sworn affidavits that these defendants filed with the courts.

Because the court presumed the falsified affidavits were truthful, judges relied upon them to issue judgments against debtors. As a result, the Attorney General charged the defendants with defrauding the Texas judicial system by knowingly submitting false affidavits to state courts. Because 90 percent of the defendants’ lawsuits named individuals who were not represented by counsel, these purported debtors did not have lawyers to challenge the legitimacy of the defendants’ claims. As a result, default judgments were improperly entered against them based upon the defendants’ falsified affidavits.
The State’s enforcement action seekS to establish a restitution trust fund for money that the defendants unlawfully coerced from Texans. The Attorney General also seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as penalties that apply under the Texas Finance Code for third-party debt collectors who violate state law.

Texans who believe they have been deceived by improper or unlawful business practices may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.


TEXT OF PRESS RELEASE FROM MINNESOTA AG'S ACTION AGAINST MIDLAND

Press Release - Monday, March 28, 2011

ATTORNEY GENERAL LORI SWANSON CHARGES ONE OF NATION’S LARGEST “DEBT BUYERS” WITH DEFRAUDING MINNESOTA COURTS AND CITIZENS BY FILING “ROBO-SIGNED” AFFIDAVITS

Minnesota Attorney General Lori Swanson today in a legal filing accused one of the nation’s largest “debt buyers” of defrauding Minnesota courts and citizens by filing false and deceptive “robo-signed” affidavits—generated at its offices in St. Cloud, Minnesota—to collect on old consumer debts that it purchased from credit card companies and others for about three cents on the dollar.

The debt buyer—Midland Funding, LLC and its administrative arm, Midland Credit Management, Inc. (collectively Midland)—has purchased $54.7 billion in old consumer debt from credit card companies and other companies. In 2009, it filed 245,000 lawsuits against individual citizens nationwide, and it has filed over 15,000 lawsuits against citizens in Minnesota courts since 2008. Midland pays for its debt acquisitions with hundreds of millions in financing from some of the nation’s largest banks, including several that sell old debt to it.
 “The company put its thumb on the scale of justice to unfairly tilt the collection process in its favor,” said Attorney General Swanson.

The Attorney General said that debt buyers cast a wide net to find people who may owe old bills and often pursue the wrong person altogether or pursue people who paid the bills long ago. In some cases, debt buyers pursue people solely because they have the same or similar name or address as the real debtor. The Attorney General said that Midland has created false and unreliable mass-produced, “robo-signed” affidavits as supposed “proof” of consumer debts in lawsuits against individual citizens in order to obtain judgments against or extract payments from mostly unrepresented citizens, some of whom had no knowledge of any alleged debt.

Midland and its publicly-traded parent corporation, Encore Capital Group, Inc., have paid more than $1.8 billion to obtain 33 million customer accounts with a face value of about $54.7 billion, or an average cost of about three cents on the dollar, according to Encore’s 2010 Form 10-K. Midland and Encore buy electronic portfolios containing billions of dollars of old, charged-off consumer debt from credit card companies, banks, telecommunications firms, and other creditors. These include Bank of America, JPMorgan Chase, Citibank, Wells Fargo, HSBC, Providian, and Verizon Wireless, among others. Several of these banks, including Bank of America, JPMorgan Chase, and Citibank, also provided Midland with financing to pursue its debt acquisitions and collections. For example, Encore currently has a $410 million revolving credit line to acquire consumer debt from many of the same banks that have sold debt to Midland, including JPMorgan Chase, Bank of America, and Citibank.

The Attorney General alleges that Midland aggressively filed thousands of lawsuits against individual citizens for collection of old, purchased debt, often supporting those lawsuits with “robo-signed” affidavits generated at its St. Cloud offices. Midland filed the robo-signed affidavits in state courts in Minnesota and around the country to obtain judgments against individual citizens.

“Robo-signing” is the practice of signing off on mass-produced, computer-generated legal documents without reading them or verifying the accuracy of the contents in order to speed up the collection process. In recent months, the mortgage industry has come under intense national scrutiny for supporting mortgage foreclosures in court with “robo-signed” affidavits. Like the mortgage industry, some debt buyers, including Midland, have used false, robo-signed affidavits to support their debt collections lawsuits.

Because acquired debt portfolios involve old debt and because debt buyers typically only acquire an electronic file about the debt and not actual copies of underlying charge slips, account statements, signed contracts, etc., citizens regularly are hounded by debt buyers for payment of bills they do not owe. In some cases, debt buyers sue people solely because they have the same or similar name or address as the real debtor, while in other cases they pursue people for bills paid back long ago. The National Consumer Law Center (NCLC) has estimated that one out of ten lawsuits filed by debt buyers are premised on bad or incorrect information.
As noted above, since 2008, Midland filed over 15,000 lawsuits in Minnesota state courts against individual Minnesota citizens, obtaining default judgments against unrepresented citizens an estimated 98 percent or more of the time. A default judgment is obtained when the subject of the lawsuit does not have an attorney and does not appear in court to contest the lawsuit. Some citizens sued by Midland state that they did not contest the lawsuit because they were not served with it, could not afford an attorney, or did not recognize the name of the debt buyer, since they had never done business with it. Midland filed false, robo-signed affidavits as supposed “proof” of the debt so as to leverage individual citizens into settlements or to persuade courts to enter default judgments against citizens on old debts. The affidavits, however, did not constitute “proof” of the debt because they were robo-signed by people who did not read them and/or who had absolutely no knowledge about the alleged debts to which they attested.

Numerous Midland employees have admitted in sworn testimony to signing up to 400 false affidavits per day, either without reading them, without personal knowledge of their contents, and/or without verifying the accuracy of the information to which the affidavits attest. The robo-signed affidavits were then filed in court to “prove” the alleged debt to the court.

In today’s legal filing, the Attorney General’s Office took the first step in filing a lawsuit against Midland by seeking clarification from a federal court in Ohio that a pending class action settlement was not intended to bar the State’s governmental enforcement action against Midland.

Midland and Encore have their primary place of business in San Diego, California. They operate a business office in St. Cloud, Minnesota at which many of the robo-signed affidavits were generated. In 2010, Encore paid $362 million to acquire portfolios of charged-off credit card, bank, and telecommunication customer accounts with face values of $10.9 billion, for an average price of about 3.3 cents per dollar of debt acquired, according to its 2010 Form 10-K. Encore states in its 2010 Form 10-K that it has “one of the industry’s largest distressed consumer databases containing information regarding approximately 20 million consumer accounts.” In 2010, Midland and Encore subsidiaries called and sent collection letters to over 8.5 million Americans, according to the company’s 2010 Form 10-K.

The debt buying industry formed about 20 years ago, in the wake of the savings and loan scandal, and has exploded in recent years. In the 1980’s, the government liquidator of failed savings and loans auctioned off for collection over $450 billion in failed S&L assets to the private sector. Seeing a new market niche, debt buyers thereafter began to purchase other kinds of debt. In 1993 debt buyers purchased an estimated $6 billion in old debt, but by 2005 that figure spiked to over $100 billion, according to the NCLC. The Federal Trade Commission has estimated that the country’s nine largest debt buyers have acquired 75 percent of all purchased debt. The four largest publicly-traded debt buyers (including Encore) reportedly purchased almost $20 billion in receivables in 2009, according to published reports.


Attorney General Swanson said that creditors and collectors are within their rights to collect debt in a lawful fashion but may not resort to illegal behavior to do so.


The Attorney General’s website, www.ag.state.mn.us has a publication entitled “Debt Buyers” that has more information for citizens about their legal rights and options if pursued by a debt buyer. For more information or to file a complaint with the Attorney General’s Office, people may call (651) 296-3353 or (800) 657-3787. People may also download a Consumer Complaint Form from the Attorney General’s website.

RELATED TERMS: robo-signed affidavits, summary judgment affidavits, affidavits of claim, personal knowledge requirement, authentication of business records, third-party records, authenticity and admissibility, business records exceptions to the hearsay rule, evidentiary issues, challenge to affidavit, motion to strike testimony by affidavit 

Sovereign immunity vs. governmental immunity - Is there a difference?

IMMUNITY OF THE STATE ITSELF ABND ITS STATE-WIDE AGENCIES 
VS.
IMMUNITY OF POLITICAL OR ADMINSTRATIVE SUBDIVISIONS
[such as counties, municipalities, school districts and other special districts]

Sovereign immunity protects the State and State agencies and their officers. Harris Cnty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). Governmental immunity, on the other hand, protects subdivisions of the State, including municipalities like the city. Id. Both types of immunity afford the same degree of protection, and both levels of government are subject to the TTCA. Tex. Civ. Prac. & Rem. Code Ann. §§ 101.001(3), 101.021, 101.025; Sykes, 136 S.W.3d at 638.

TTCA= Texas Tort Claims Act

SOURCE: Houston Court of Appeals - 14-10-01216-CV - 7/7/2011

OTHER IMMUNITY DEFENSES: Qualified immunity (Section 1983 claim), good-faith immunity, official immunity of state officers and employees, judicial immunity, judicial proceedings communications privilige also referred to as absolute immunity  

What is Constructive Discharge in employment law?

 
TERMINATION OF EMPLOYMENT: CONSTRUCTIVE DISCHARGE 
   How does it differ from an ordinary firing?

 
A constructive discharge occurs when an employer makes conditions so intolerable that an employee reasonably feels compelled to resign. See Baylor University v. Coley, 221 S.W.3d 599, 604-05 (Tex. 2007), citing Pennsylvania State Police v. Suders, 542 U.S. 129, 141, 124 S.Ct. 2342, 2351, 159 L.Ed.2d 204 (2004); Hammond v. Katy Independent School District, 821 S.W.2d 174, 177 (Tex.App.--Houston [14th Dist.] 1991, no writ).
Many factors are relevant to the issue, including evidence of badgering, harassment, or humiliation by the employer calculated to encourage the employee's resignation. Davis v. City of Grapevine, 188 S.W.3d 748, 766 (Tex.App.--Fort Worth 2006, pet. denied).
SOURCE: El Paso Court of Appeals - 08-09-00007-CV - 7/6/11 
RELATED LEGAL TERMS: employment disputes, wrongful termination, whistleblower claims, discrimination, retaliation by employer


Thursday, July 7, 2011

Can assisted living home employees sue for retaliatory discharge?

Does a statutory cause of action exist for retaliatory discharge against an assisted living facility?

El Paso Court of Appeals finds that private cause of action is available and affirms a judgment in excess of $134,000 plus post-judgment interest in favor of a former nursing home employee.
 
IS THERE A PRIVATE CAUSE OF ACTION FOR VIOLATION OF ASSISTED LIVING FACILTY LICENSING ACT?

[ Employer - Nursing Home] argues that the provisions of the Assisted Living Facility Licensing Act do not create a private cause of action for an aggrieved employee. TEX.HEALTH & SAFETY CODE ANN. § 247.068. This is a question of statutory construction, which we review de novo. See McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex. 2003). Our primary objective in construing any statute is to determine the Legislature’s intent in enacting the particular provision, and to give that provision its intended effect. Ramirez, 109 S.W.3d at 745. We must interpret the statute according to the plain meaning of the language used, and must read the statute as a whole without giving effect to certain provisions at the expense of others. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003). Each word, phrase, or expression must be read as if it were deliberately chosen, and we will presume that words excluded from a provision were excluded purposefully. Gables Realty Ltd. Partnership v. Travis Central Appraisal Dist., 81 S.W.3d 869, 873 (Tex.App.--Austin 2002, pet. denied).

Section 247.068 provides:

(a) A person licensed under this chapter may not retaliate against a person for filing a complaint, presenting a grievance, or providing in good faith information relating to personal care services provided by the license holder.

(b) This section does not prohibit a license holder from terminating an employee for a reason other than retaliation.
TEX.HEALTH & SAFETY CODE ANN. § 247.068 (West 2010). The question presented is whether this provision was intended to create a private cause of action upon which an aggrieved employee can personally sue an offending employer, or whether the Legislature intended only to provide the Department with the authority to penalize facilities for retaliatory actions. We begin our analysis with other subchapters of the Health and Safety Code. Legislation relating to the creation and administration of health facilities in Texas is compiled in Title IV of the Code.

Convalescent and Nursing Homes

Chapter 242 relates to convalescent and nursing homes. Section 242.133 provides in pertinent part:

§ 242.133. Retaliation Against Employees Prohibited
. . .
(b) An employee has a cause of action against an institution, or the owner or another employee of the institution, that suspends or terminates the employment of the person or otherwise disciplines or discriminates or retaliates against the employee for reporting to the employee’s supervisor, an administrator of the institution, a state regulatory agency, or a law enforcement agency a violation of law, including a violation of this chapter or a rule adopted under this chapter, or for initiating or cooperating in any investigation or proceeding of a governmental entity relating to care, services, or conditions at the institution.
(c) The petitioner may recover:

(1) the greater of $1,000 or actual damages, including damages for mental anguish even if an injury other than mental anguish is not shown and damages for lost wages if the petitioner’s employment was suspended or terminated;
(2) exemplary damages;
(3) court costs; and
(4) reasonable attorney’s fees.
(d) In addition to the amounts that may be recovered under Subsection (c), a person whose employment is suspended or terminated is entitled to appropriate injunctive relief, including, if applicable:
(1) reinstatement in the person’s former position; and
(2) reinstatement of lost fringe benefits or seniority rights.
TEX.HEALTH & SAFETY CODE ANN. § 242.133 (b)-(d). Subsection (e) provides the requisite statute of limitations. Subsection (f) places the burden of proof on the petitioner, but imposes a rebuttable presumption that the person’s employment was suspended or terminated for reporting abuse or neglect if the person is suspended or terminated within sixty days after the date the person reported in good faith. Subsection (g) then establishes three alternative venues. Clearly, the Legislature manifested its intention to provide a private cause of action for violations of Chapter 242.

Intermediate Care Facilities for the Mentally Retarded

Chapter 252 addresses intermediate care facilities for the mentally retarded. Section 252.132 speaks to retaliation against an employee and virtually mirrors the language of Chapter 242 with regard to a private cause of action, venue, statutes of limitation, and recoverable damages. TEX.HEALTH & SAFETY CODE ANN. § 252.132.

Mandatory Overtime for Nurses

Chapter 258 prohibits mandatory overtime for nurses. Section 258.005 further prohibits a hospital from suspending, terminating, disciplining, or discriminating against a nurse who refuses to work mandatory overtime. TEX.HEALTH & SAFETY CODE ANN. § 258.005 (West 2010). It contains no reference to administrative penalties or a private cause of action.

Restraints and Seclusion

Chapter 322 prohibits certain restraints against a resident of a facility. Section 322.054 provides that a facility may not discharge or otherwise retaliate against an employee because the employee files a complaint, presents a grievance, or otherwise provides in good faith information relating to the misuse of restraints or seclusion at the facility. TEX.HEALTH & SAFETY CODE ANN. § 322.054. Subsection (b) allows a licensing agency to (1) revoke, suspend, or refuse to renew the license, registration, or certification of a facility that violates this provision, or (2) place a facility in violation on probation. The statute provides no remedy other than administrative penalties.

Ambulatory Surgical Centers

Chapter 243 relates to ambulatory surgical centers. While it outlines provisions for licensing and penalties, it contains no retaliatory prohibition. The same is true for Chapters 244 (Birthing Centers), 245 (Abortion Facilities), 246 (Continuing Care Facilities), 248 (Special Care Facilities), 249 (Maternity Homes), 251 (End Stage Renal Disease Facilities), and 254 (Freestanding Emergency Medical Care Facilities).

Recapitulation

The Health and Safety Code thus contains two chapters that affirmatively create a private cause of action and provide specific details as to venue, damages, limitations, and burdens of proof. One chapter prohibits retaliation but provides no recourse except administrative penalties. One statute prohibits retaliation, but provides neither an administrative penalty nor a private cause of action. Eight chapters outline provisions for licensing and penalties, but contain no retaliatory prohibition. We turn now to Chapter 247.

Assisted Living Facilities

We have already restated the retaliatory provisions of this statute. Subchapter C provides for general enforcement. Various sections within this subchapter specify remedies, including:

§ 247.041 -- Denial, Suspension, or Revocation of License
§ 247.042 -- Emergency Suspension or Closing Order
§ 247.043 -- Investigation of Abuse, Exploitation, or Neglect
§ 247.044 -- Injunction
§ 247.045 -- Civil Penalties
§ 247.0451 -- Administrative Penalty
Subchapter D contains the retaliation provision, the Residents’ Bill of Rights (Section 247.064), and the Provider’s Bill of Rights (Section 247.065). Blanco suggests that these provisions, not found elsewhere in the Code, indicate an intent to create a private cause of action.

All assisted living facilities are required to post a copy of the Residents’ Bill of Rights in a prominent place in the facility. TEX.HEALTH & SAFETY CODE ANN. § 247.064(b). The Bill of Rights must inform the residents of their right to:

(1) manage the resident’s financial affairs;
(2) determine the resident’s dress, hair style, or other personal effects according to individual preference, except that the resident has the responsibility to maintain personal hygiene;
(3) retain and use personal property in the resident’s immediate living quarters and to have an individual locked cabinet in which to keep personal property;

(4) receive and send unopened mail;
(5) unaccompanied access to a telephone at a reasonable hour or in case of an emergency or personal crisis;
(6) privacy;

(7) unrestricted communication, including personal visitation with any person of the resident’s choice, at any reasonable hour, including family members and representatives of advocacy groups and community service organizations;

(8) make contacts with the community and to achieve the highest level of independence, autonomy, and interaction with the community of which the resident is capable;

(9) present grievances on behalf of the resident or others to the operator, state agencies, or other persons without threat of reprisal in any manner;

(10) a safe and decent living environment considerate and respectful care that recognizes the dignity and individuality of the resident;

(11) refuse to perform services for the facility, except as contracted for by the resident and operator;

(12) practice the religion of the resident’s choice;
(13) leave the facility temporarily or permanently, subject to contractual or financial obligations; and
(14) not be deprived of any constitutional, civil, or legal right solely by reason of residence in an assisted living facility.
[Emphasis added]. TEX.HEALTH & SAFETY CODE ANN. § 247.064(b). None of these provisions provides a right or remedy to an employee.

Similarly, Section 247.065 contains the “Providers’ Bill of Rights,” which specifies that a “provider of personal care services” has the right to:

(1) be shown consideration and respect that recognizes the dignity and individuality of the provider and assisted living facility;
(2) terminate a resident’s contract for just cause after a written 30-day notice;
(3) terminate a contract immediately, after notice to the department, if the provider finds that a resident creates a serious or immediate threat to the health, safety, or welfare of other residents of the assisted living facility;
(4) present grievances, file complaints, or provide information to state agencies or other persons without threat of reprisal or retaliation;
(5) refuse to perform services for the resident or the resident’s family other than those contracted for by the resident and the provider;
(6) contact with the community to achieve the highest level of independence, autonomy, interaction, and services to residents;
(7) access to patient information concerning a client referred to the facility, which must remain confidential as provided by law;
(8) refuse a person referred to the facility if the referral is inappropriate;
(9) maintain an environment free of weapons and drugs; and
(10) be made aware of a resident’s problems, including self-abuse, violent behavior, alcoholism, or drug abuse.
[Emphasis added]. TEX.HEALTH & SAFETY CODE ANN. § 247.065(b). Only paragraph (8) of the Residents’ Bill of Rights and paragraph (4) of the Provider’s Bill of Rights [the right to present grievances, file complaints, or provide information to state agencies or other persons without threat of reprisal or retaliation] have a potential bearing on our analysis. Because these provisions offer no remedy for the prohibited retaliation, we must still look to Subchapter C which addresses statutory enforcement.

Blanco maintains that the language in Section 247.049, which is contained within Subchapter C, has no meaning unless a private cause of action was intended.

§ 247.049. Use of Regulatory Reports and Documents
(a) Except as otherwise provided by this section, a report or other document prepared by the department that relates to regulation of an assisted living facility is not admissible as evidence in a civil action to prove that the facility violated a standard prescribed under this chapter.
(b) Subsection (a) does not:
(1) bar the admission into evidence of department reports or other documents in an enforcement action in which the state or an agency or political subdivision of the state is a party, including:
(A) an action seeking injunctive relief under Section 247.044;
(B) an action seeking imposition of a civil penalty under Section 247.045;
(c) a contested case hearing involving denial, suspension, or revocation of a license issued under this chapter; and
(D) an action seeking imposition of an administrative penalty under this subchapter;

(2) bar the admission into evidence of department reports or other documents that are offered:
(A) to establish warning or notice to an assisted living facility of a relevant department determination; or

(B) under any rule or evidentiary predicate of the Texas Rules of Evidence,
(3) prohibit of limit the testimony of a department employee, in accordance with the Texas Rules of Evidence, as to observations, factual findings, conclusions, or determinations that an assisted living facility violated a standard prescribed under this chapter if the observations, factual findings, conclusions, or determinations were made in the discharge of the employee’s official duties for the department; or
(4) prohibit or limit the use of department reports or other documents in depositions or other forms of discovery conducted in connection with a civil action if use of the reports or other documents appears reasonably calculated to lead to the discovery of admissible evidence.
TEX.HEALTH & SAFETY CODE ANN. § 247.049.

The question, then, is whether the enforcement subchapter contemplates a remedy that may be pursued when “the state or an agency or political subdivision of the state” is not a party. It does not. For that reason, Section 247.049(a) appears to be meaningless. This begs the question whether Subsection (a) authorizes a civil action by a resident or an employee against an assisted living facility for violations of Chapter 247. Emeritus has not directly responded to this question. It tells us, however, that the Legislature gave the Department the duty to impose “prompt and effective remedies for violations of this chapter and rules and standards adopted under this chapter.” See TEX.HEALTH & SAFETY CODE ANN. § 247.0011(b)(6). Its brief goes so far as to suggest that, “as a matter of law only the [Department] is authorized to redress complaints . . . .” But Section 247.049 bars admission of a Department report or document in all civil cases except those in which the state or an agency or political subdivision of the state is a party. So what are “all” of those “civil cases”? But for Section 247.049(a), we would wholeheartedly agree with Emeritus. Yet the Code Construction Act informs us that we should not construe a statute so as to render the law absurd or meaningless. As Justice Willett has recently articulated:

The meaning of a statute is a legal question, which we review de novo to ascertain and give effect to the Legislature’s intent. F.F.P. Operating Partners., L.P. v. Duenez, 237 S.W.3d 680, 683 (Tex. 2007). Where text is clear, text is determinative of that intent. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006)(‘[W]hen possible, we discern [legislative intent] from the plain meaning of the words chosen.’); see also Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651-52 (Tex. 2006). This general rule applies unless enforcing the plain language of the statute as written would produce absurd results. Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex. 1999). Therefore, our practice when construing a statute is to recognize that ‘the words [the Legislature] chooses should be the surest guide to legislative intent.’ Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999). Only when those words are ambiguous do we “resort to rules of construction or extrinsic aids.” In re Estate of Nash, 220 S.W.3d 914, 917 (Tex. 2007). [Emphasis added].

Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009)(Willett, J., concurring).

We thus conclude that a statute imposing evidentiary rules in civil cases in which the Department is not a party has no meaning whatsoever if only the Department can enforce the statute.

We overrule Issue One.

SOURCE: El Paso Court of Appeals - 08-09-00007-CV - 7/6/11

LINK TO OPINION: http://www.8thcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionId=65667

CASE DETAILS: Emeritus Corporation v. Lillian Blanco, No. 08-09-00007-CV (Before Justices McClure and Rivera, The Honorable Barajas (Visiting))(Opinion by Justice McClure affirming judgment of County Court at Law No 5 of El Paso County)  


RELATED BLAWG POST


El Paso Court of Appeals Recognizes Private Right of Action for Retaliation for Assisted Living Facility Employees - July 11, 2011 by Russell Cawyer 
SNIPPET: In an issue of first impression, the El Paso Court of Appeals has held that the Assisted Living Facility Licensing Act creates a private right of action for an employee who has filed a complaint, grievance of providing information in good faith relating to personal care services of the assisted living facility. [...]

This opinion appears to be in contrast to the longstanding rule in Texas that it is for the Legislature to create new causes of action and not for judicial bodies to do so. Given the lack of an express private right to file a lawsuit under the statute (when other provisions of the Health & Safety Code provide a remedy), I expect an appeal to the Texas Supreme Court with amicus briefs from the Assisted Living Facility interest and business groups that think a judicially created private cause of action in the absence of express statutory provision providing for such is unsupported by Texas jurisprudence.

Claim under the Whistleblower Act: Procedural requirements & limitations period

WRONGFUL TERMINATION  CLAIMS OF PUBLIC EMPLOYEES UNDER THE TEXAS WHISTLEBLOWER ACT

The Texas Whistleblower Act requires that a state or local governmental entity may not suspend or terminate the employment of, or take other adverse personnel action against, a public employee who in good faith reports a violation of law by the employing governmental entity or another public employee to an appropriate law enforcement authority. TEX. GOV’T CODE ANN. § 554.002(a).

DEADLINE TO BRING SUIT

Pursuant to section 554.005 of the Act, an employee who seeks relief must sue no later than the 90th day after the date on which the alleged violation occurred or was discovered through reasonable diligence, except as provided in section 554.006. TEX. GOV’T CODE ANN. § 554.005 (Vernon 2004).

ADMINISTRATIVE COMPLAINT PROCEDURE PRIOR TO SUIT

Section 554.006 provides as follows: (a) A public employee must initiate action under the grievance or appeal procedures of the employing state or local governmental entity relating to suspension or termination of employment or adverse personnel action before suing under this chapter. (b) The employee must invoke the applicable grievance or appeal procedures not later than then 90th day after the date on which the alleged violation of this chapter: (1) occurred; or (2) was discovered by the employee through reasonable diligence. (c) Time used by the employee in acting under the grievance or appeal procedures is excluded, except as provided by Subsection (d), from the period established by Section 554.005. (d)

If a final decision is not rendered before the 61st day after the date procedures are initiated under Subsection (a), the employee may elect to: (1) exhaust the applicable procedures under Subsection (a), in which event the employee must sue not later than the 30th day after the date those procedures are exhausted to obtain relief under this chapter; or (2) terminate procedures under Subsection (a), in which event the employee must sue within the time remaining under Section 554.005 to obtain relief under this chapter. TEX. GOV’T CODE ANN. § 554.006 (Vernon 2004).

SOURCE: Houston Court of Appeals - 01-10-00485-CV - 7/7/11

The record shows that [ Whistleblower Plaintiff ] initiated [ Houston ISD ]’s grievance procedure in May 2005. She filed an amended grievance in September 2005. A final decision was not rendered in the procedure within 61 days. See id. § 554.006(d). [ Whistleblower Plaintiff ], however, pursued the grievance procedure to a level three decision by [ Houston ISD ]’s board of trustees. While she pursued the grievance procedure, the limitations period was tolled. See id. § 554.006(c). The board of trustees issued its decision against [ Whistleblower Plaintiff ] on June 15, 2006. Under Chapter 21 of the Education Code, [ Whistleblower Plaintiff ] had 20 days to appeal the board’s decision to the Commissioner of Education. See TEX. EDUC. CODE ANN. § 21.301(a) (Vernon 2006). As discussed supra, [ Whistleblower Plaintiff ] did not appeal the decision. By not appealing to the Commissioner, [ Whistleblower Plaintiff ] chose to abandon her administrative remedy and terminate the grievance procedure. Assuming the broadest reading of the record and statute, the limitations period ran in October 2006, that is, 90 days from when [ Whistleblower Plaintiff ] terminated the grievance procedure. See TEX. GOV’T CODE ANN. § 554.006(d)(2); see also id. § 554.005. [ Whistleblower Plaintiff ] did not file suit until March 2007—well outside the limitations period.[8] See id. § 554.005.

We conclude that [ Houston ISD ] met its summary-judgment burden to conclusively show that [ Whistleblower Plaintiff ]’s whistleblower claim was barred by limitations. See TEX. R. CIV. P. 166a(c). [ Whistleblower Plaintiff ] did not meet her corresponding burden to raise a genuine issue of material fact precluding summary judgment. Thus, we hold that the summary judgment is properly granted in favor of [ Houston ISD ] with regard to [ Whistleblower Plaintiff ]’s whistleblower claim. We overrule [ Whistleblower Plaintiff ]’s two issues to the extent they challenge the trial court’s summary judgment with respect to her whistleblower claim.

Friday, July 1, 2011

July 1, 2011 Texas Supreme Court releases flurry of opinions

Supreme Court Building in Austin

The Supreme Court of Texas released opinions in 12 cases today; - too many to quickly mine for caselaw nuggets on causes of action and affirmative defenses suitable for posting here. The acutal number of separate opinion is even larger due to multiple concurrences and dissents.


The list follows below, with excerpts from the deciding opinions.

For more details and links to opinions in pdf on the Court's web site, click


MOST EYEBROW-RAISING IN TODAY'S CROP OF DECISIONS: Supremes offer supplemental answer to what [else] constitutes a health-care liability claim requiring an expert's certification of non-frivolousness:

Anthing-but-therapeutic SPIDER BITE AS MEDICAL MALPRACTICE - We kid you not. 


TORT REFORM IN ACTION:

Omaha Healthcare Center, LLC v. Johnson (Tex. 2011)

No. 08-0231 (Tex. Jul. 1, 2011)(Opinion by Justice Phil Johnson) (HCLC, med-mal suit, characterization of
claim)(expert report requirement applies to claim of negligent exposure to spider bite in nursing home).

In this case we consider whether claims against a nursing home regarding a patient’s death alleged to have been caused by a brown recluse spider bite are health care liability claims (HCLCs) that required an expert report to be served. The trial court and court of appeals held that they were not. We disagree.

Conclusion. Johnson’s claim is an HCLC and should have been dismissed. Because Omaha requested  its attorney’s fees and costs in the trial court pursuant to Civil Practice and Remedies Code section 74.351(b)(1), the case must be remanded. We grant Omaha’s petition for review. Without hearing oral argument we reverse the court of appeals’  judgment and remand the case to the trial court with instructions to dismiss Johnson’s claims and consier  Omaha’s request for attorney’s fees and costs.
Justice Debra Lehrmann delivered a dissenting opinion, in which Justice David Medina joined. [pdf]

CAVEAT PROPERTY OWNERS: Don't waive statutory remedy to recover stolen goods or compensation

Dallas City Hall
City of Dallas v. VSC, LLC (Tex. 2011)

No. 08-0265 (Tex. Jul. 1, 2011)(Opinion by Chief Justice Wallace B. Jefferson) (takings claim against government precluded given existence of statutory remedy)

We expect our government to retrieve stolen property and return it to the rightful owner. What happens, though, when a person claims an interest in property the government has seized? In this case, the
City of Dallas seized vehicles, which it alleged were stolen, from a company that was entitled to petition for  their return. See Tex. Code Crim. Proc. art. 47.01a(a). Instead of pursuing its statutory remedy, the  company sued, alleging that its interest in those vehicles had been taken without just compensation. We  hold that the availability of the statutory remedy precludes a takings claim. We reverse the court of appeals’ judgment and render judgment dismissing this suit.

Conclusion. VSC received all of the process to which it was entitled. A party cannot claim a lack of just  compensation based on its own failure to invoke a law designed to adjudicate such a claim. We reverse he
court of appeals’ judgment and render judgment dismissing the case. Tex. R. App. P. 60.2(c).
Justice Dale Wainwright delivered a dissenting opinion, in which Justice Phil Johnson and Justice Eva M.
Guzman joined.

UTILITIES REGULATION: Too arcane for the average light-switch flipper to comprehend

AEP Tex. Central Co. v. PUC (Tex. 2011)

No. 08-0634 (Tex. Jul. 1, 2011)(Opinion by Justice Don R. Willett)(PUC utilities law)

This appeal challenges a final order of the Public Utility Commission in a true-up proceeding under Chapter 39 of the Utilities Code, a part of the Public Utility Regulatory Act (PURA). The district court affirmed the order in part and reversed it in part. The court of appeals affirmed the judgment of the district court in part and reversed it in part.1 In two recent decisions, we have reviewed PUC orders in true-up proceedings, giving a general description of Chapter 39 and the true-up procedure

In today’s case, AEP Texas Central Co. (AEP), a transmission and distribution utility, and CPL Retail  Energy, L.P., its affiliated retail electric provider, initiated a proceeding under Section 39.262 to finalize stranded costs and other true-up amounts. The State of Texas, several municipalities, and several other  parties who are consumers of electricity or represent consumer interests (collectively the Consumers) intervened in the proceeding. In its final order (Order), the PUC determined stranded costs, which generally are “based on the  difference between the book value of generation assets and the market value of these assets.”5 The PUC  also made a separate determination of the capacity auction true-up under Section 39.262(d)(2). The issues before us now concern market value, net book value (NBV), and the capacity auction true-up.

Conclusion. We grant the petition for review, and without hearing oral argument, affirm in part and  reverse in part the court of appeals’ judgment, and remand this case to the PUC for further proceedings consistent with this opinion.

NUISANCE ABATEMENT: What rights and remedies does the property owner have?

City of Dallas v. Stewart (Tex. 2011)

No. 09-0257 (Tex. Jul. 1, 2011)(Opinion by Chief Wallace B. Jefferson) (administrative resolution of nuisance abatement dispute with municipality not preclusive, judicial review available to property owner, takings claim)

Urban blight threatens neighborhoods. Either as a risk to public health or as a base for illicit activity, dilapidated structures harm property values far more than their numbers suggest. Cities must be able to abate these nuisances to avoid disease and deter crime. But when the government sets up a mechanism to deal with this very real problem, it must nonetheless comply with constitutional mandates that protect a citizen’s right to her property.

Today we hold that a system that permits constitutional issues of this importance to be decided by an administrative board, whose decisions are essentially conclusive, does not correctly balance the need to abate nuisances against the rights accorded to property owners under our constitution. Independent court review is a constitutional necessity. We affirm the court of appeals’ judgment, but on different grounds.

Conclusion. That the URSB’s nuisance determination cannot be accorded preclusive effect in a takings  suit is compelled by the constitution and Steele, by Lurie and its antecedents, by the nature of the quesion and the nature of the right. The protection of property rights, central to the functioning of our society, should not—indeed, cannot—be charged to the same people who seek to take those rights away. Because we believe that unelected municipal agencies cannot be effective bulwarks against  constitutional violations, we hold that the URSB’s nuisance determination, and the trial court’s affirmance of  that determination under a substantial evidence standard, were not entitled to preclusive effect in Stewart’s  takings case, and the trial court correctly considered the issue de novo.
Justice Eva M. Guzman delivered a dissenting opinion, in which Justice Dale Wainwright, Justice Paul W.
Green, and Justice Phil Johnson joined. [pdf]


PRICING & DISCOUNTING OF MEDICAL CARE EXPENSES FOR DAMAGE CALCULATION PURPOSES - What can the court award?

Now we know how to crank out the numbers
Haygood v. Garza de Escabedo (Tex. 2011)

No. 09-0377 (Tex. Jul. 1, 2011)(Opinion by Justice Nathan L. Hecht) (what are reasonable health-care  expenses, what is incurred and recoverable?)

Damages for wrongful personal injury include the reasonable expenses for necessary medical care, but  it has become increasingly difficult to determine what expenses are reasonable. Health care providers set charges they maintain are reasonable while agreeing to reimbursement at much lower rates determined by insurers to be reasonable, resulting in great disparities between amounts billed and payments accepted. Section 41.0105 of the Texas Civil Practice and Remedies Code, enacted in 2003 as part of a wide-ranging package of tort-reform measures, provides that “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.” We agree with the court of appeals that this statute limits recovery, and consequently the evidence at trial, to expenses that the provider has a legal right to be paid.

Conclusion: [W]e hold that only evidence of recoverable medical expenses is admissible at trial. We disapprove the cases that have reached conflicting decisions. Of course, the collateral source rule continues to apply to such expenses, and the jury should not be told that they will be covered in whole or in part by insurance. Nor should the jury be told that a health care provider adjusted its charges because of insurance.
Justice Debra Lehrmann delivered a dissenting opinion, in which Justice David Medina joined. [pdf]


Paper ballots passé 
VIRTUAL-ONLY [paperless] VOTING MACHINES

Andrade v. NAACP of Austin (Tex. 2011)

No. 09-0420 (Tex. Jul. 1, 2011)(Opinion by Chief Wallace B. Jefferson)(challenge to electronic voting without a paper record being generated at the same time)

Technology is changing the way we vote. It has not eliminated controversy about the way votes are recorded and verified. We must decide whether voters have standing to pursue complaints about an electronic voting machine that does not produce a contemporaneous paper record of each vote. Because we conclude that most of the voters’ allegations involve generalized grievances about the lawfulness of government acts, and because their remaining claims fail on their merits, we reverse the court of appeals’ judgment and render judgment dismissing the case.

Conclusion. The voters raise legitimate concerns about system integrity and vulnerability. But these  are policy disputes more appropriately resolved in the give-and-take of politics. Perhaps the Secretary will  decide, as California has, to de-certify certain DREs. Perhaps the Legislature will require a contemporaneous paper record of votes cast, or perhaps Texas will curtail or abandon DRE use altogether.  But we cannot say the Secretary’s decision to certify this device violated the voters’ equal protection rights  or that the voters can pursue generalized grievances about the lawfulness of her acts. “Vindicating the  public interest (including the public interest in Government observance of the Constitution and laws) is the function of [the Legislature] and the Chief Executive.” Lujan, 504 U.S. at 576. We reverse the court of appeals’ judgment and render judgment dismissing the case. Tex. R. App. P. 60.2(c).


INTERLOCUTORY APPEAL IN MED-MAL CASES WHEN THE REPORT NEEDS FIXING:

Hold your fire! 

Tyler Scoresby, M.D. v. Santillan (Tex. 2011)

No. 09-0497(Tex. Jul. 1, 2011)(Opinion by Justice Don R. Willett)
(HCLC med-mal suits, expert report deadline extension, curing of defective reports, immmediate appealability of trial court's decision by interlocutory appeal)

The Medical Liability Act entitles a defendant to dismissal of a health care liability claim if, within 120 days of the date suit was filed, he is not served with an expert report showing that the claim against him has merit. The trial court’s refusal to dismiss is immediately appealable. The Act sets specific requirements for an  adequate report and mandates that “an objective good faith effort [be made] to comply” with them,5 but it also authorizes the trial court to give a plaintiff who meets the 120-day deadline an additional thirty days in which to cure a “deficiency” in the elements of the report. The trial court should err on the side of granting the additional time and must grant it if the deficiencies are curable. The defendant cannot seek review of this ruling or appeal the court’s concomitant refusal to dismiss the claim before the thirty-day period has expired.

Conclusion. We conclude that a thirty-day extension to cure deficiencies in an expert report may be granted if the report is served by the statutory deadline, if it contains the opinion of an individual with expertise that the claim has merit, and if the defendant’s conduct is implicated. We recognize that this is a minimal standard, but we think it is necessary if multiple interlocutory appeals are to be avoided, and appropriate to give a claimant the opportunity provided by the Act’s thirty-day extension to show that a claim has merit. All deficiencies, whether in the expert’s opinions or qualifications, are subject to being cured before an appeal may be taken from the trial court’s refusal to dismiss the case.
Justice Don R. Willett delivered a concurring opinion. [pdf]
Justice Phil Johnson delivered a dissenting opinion, in which Justice Dale Wainwright joined. [pdf]

KEEPING PUBLIC OFFICIAL'S DETAILS SECRET IN THE NAME OF SAFETY

Tx DPS v. Cox Texas Newspapers, L.P. (Tex. 2011)  

No. 09-0530 (Tex. Jul. 1, 2011)(access to records)

Our common law protects from public disclosure highly intimate or embarrassing facts. We must decide whether it also protects information that substantially threatens physical harm. We conclude that it does.  Both sides raise important questions, not just about safety but also about the public’s right to know how the
government spends taxpayer money. Those issues could not have been fully litigated under the standard that prevailed before today's decision. Accordingly, we reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings.

Conclusion: We reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings consistent with this opinion. Tex. R. App. P. 60.2 (d).
Justice Dale Wainwright delivered a concurring opinion, in which Justice Phil Johnson joined. [pdf]
(Justice David Medina and Justice Don R. Willett not sitting)


OPEN RECORD ACT aka PUBLIC INFORMATION ACT, henceforth a/k/a TPIA, not just PIA 

Jackson v. State Office of Administrative Hearings (Tex. 2011)

No. 10-0002 (Tex. Jul. 1, 2011)(Opinion by Justice Phil Johnson)(open records act request under PIA)

In order to withhold public information requested pursuant to the Texas Public Information Act (TPIA) a  governmental entity must demonstrate that the requested information is not within the scope of the TPIA or that it falls within one of TPIA’s specific exceptions to the disclosures requested. See Tex. Gov’t Code §§ 552.101-.148; City of Garland v. Dallas Morning News, 22 S.W.3d 351, 355-56 (Tex. 2000). In this case, the State Office of Administrative Hearings (SOAH) refused to disclose certain decisions and orders in license suspension cases related to delinquent child support. The trial court and court of appeals agreed with SOAH that the information is expressly excepted from disclosure by the Texas Government Code provisions.We hold that the decisions and orders must be disclosed after redaction of information expressly excepted from disclosure and not already in a public record or otherwise in the public domain. We reverse and remand to the trial court for further proceedings.

Conclusion. The decisions and orders Jackson requested must be disclosed. See Tex. Gov’t Code §552.002. The Legislature has clearly expressed its intent that exceptions to disclosure be construed narrowly. See Tex. Gov’t Code § 552.001; In re Georgetown, 53 S.W.3d at 340 (“‘When the Legislature has intended to make information confidential, it has not hesitated to so provide in express terms.’” (quoting
Birnbaum v. Alliance of Am. Insurers, 994 S.W.2d 766, 776 (Tex. App.—Austin 1999, pet. denied)); see also Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981) (“[E]very word of a statute must be presumed to have been used for a purpose. Likewise, we believe every word excluded from a statute must also be presumed to have been excluded for a purpose.”) (citations omitted). We decline to read the language of the statute broader than it is written and we conclude that the purpose and intent of the TPIA can be fulfilled by disclosing the requested documents with redactions. See City of Fort Worth v. Cornyn, 86 S.W.3d 320, 326 (Tex. App.—Austin 2002, no pet.) (“To find otherwise would also be inconsistent with the Legislature’s directive to liberally construe the Act in favor of disclosure.”). We therefore hold that SOAH must disclose the requested decisions and orders after redaction of any information obtained during provision of Chapter 231 services, such as information concerning a custodial parent, noncustodial parent, child, and an alleged or presumed father, that was not already in the public domain.


CATCHING SOMETHING ON THE BUS RATHER THAN JUST CATCHING THE BUS:

Just call the number on the back door
when the drivers spreads TB
Will insurer pay when the driver gets the passenger sick?

Lancer Ins. Co. v. Garcia Holiday Tours (Tex. 2011)

No. 10-0096 (Tex. Jul. 1, 2011)(Opinion by Justice David Medina) (insurance coverage, indemnity, liability
for communication of disease by bus driver to passenger)

The question in this appeal is whether the transmission of a communicable disease from the driver of a  motor vehicle to a passenger is a covered loss under a business auto policy, which affords coverage for accidental bodily injuries resulting from the vehicle’s use. The issue is one of first impression in this state and perhaps the country. The parties advise that they have found no similar reported cases.

The trial court concluded that the policy covered this type of occurrence and rendered summary judgment that the insurance carrier owed a duty to indemnify the insured. The court of appeals agreed that  the policy might provide coverage for such a claim but reversed the summary judgment and remanded the case to the trial court to resolve a factual dispute about whether the passengers had contracted the disease while in the vehicle. 308 S.W.3d 35, 47 (Tex. App.—San Antonio 2009). Because we conclude that communicable diseases are not an insured risk under this particular policy, we reverse the judgment below and render judgment for the insurance carrier.

Conclusion: We conclude that the transmission of a communicable disease from a bus driver to his passengers was not a risk assumed by the insurance carrier under this business auto policy because the
passengers’ injuries did not result from the vehicle’s use but rather from the bus company’s use of an unhealthy driver. The bus, itself, in its capacity as a mode of transportation, did not produce, and was not a substantial factor in producing, the passengers’ injuries. The court of appeals’ judgment is accordingly reversed and judgment rendered that the passengers, bus company, and driver take nothing on their indemnity claim against the insurance carrier.


ATTORNEY-CLIENT PRIVILEGE: Will the client's secrets leave with the firm-jumping paralegal?  


In Re Guaranty Ins. Services, Inc. (Tex. 2011)(per curiam)

No. 10-0364 (Tex. Jul. 1, 2011)(per curiam opinion) (mandamus granted to undo firm's disqualification from case) (practice of law, law firm support staff-based disqualification, conflicts of interest involving paralegal working for both sides in lawsuit)

What happens when a law firm’s efforts to screen a conflict fail, permitting a nonlawyer who worked on one side of a case at one firm to work on the other side of the same case at the opposing firm? Here, the trial
court disqualified the second firm, reasoning there was a conclusive presumption that the nonlawyer had  shared confidential information, despite evidence he had not. A divided court of appeals denied mandamus  relief. 310 S.W.3d 630, 634. Given our prior decisions on the subject—particularly our recent decision in In re Columbia Valley Healthcare System, L.P., 320 S.W.3d 819 (Tex. 2010) (orig. proceeding), issued our months after the court of appeals’ decision below—we conclude disqualification was not warranted. Further, because the improper disqualification was a clear abuse of discretion for which there is no adequate remedy by appeal, mandamus relief is warranted. See In re Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding) (describing when mandamus relief may issue); NCNB Tex. Nat’l Bank v. Coker, 765 S.W.2d 398, 400 (Tex. 1989) (orig. proceeding) (granting mandamus in context of improper disqualification). We conditionally grant mandamus relief and direct the trial court to vacate its disqualification order.For these reasons, and without hearing oral argument, see Tex. R. App. P. 52.8(c), we conditionally grant mandamus relief and direct the trial court to vacate its order granting the motion to disqualify. We are confident the trial court will comply, and the writ will issue only if it does not.

RARE BIRD: Petition for Writ of Mandamus denied with Opinion:

PARALLEL PROCEEDINGS: Plea for Abatement rather than Plea to the Jurisdiction should be used to enforce dominant jurisdiction when two cases are pending in different courts

In Re Puig (Tex. 2011)

No. 10-0460 (Tex. Jul. 1, 2011)(per curiam opinion) (mandamus denied)(dominant and vs. exclusive jurisdiction; proper procedural vehicle to sort it which court will proceed)

In this case, we are asked to grant mandamus relief to correct a district court’s denial of a plea to the jurisdiction. The plea challenged the district court’s jurisdiction to determine the ownership of a ranch  allegedly owned, in part, by an estate undergoing administration in a county court at law. Under our precedent, the issue here is one of dominant, not exclusive, jurisdiction. The proper method for contesting a court’s lack of dominant jurisdiction is the filing of a plea in abatement, not a plea to the jurisdiction as the relators filed here. See Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 247–48 (Tex. 1988). Because the district court did not abuse its discretion in denying the relators’ plea to the jurisdiction, we deny the petition for writ of mandamus.

Conclusion: Because the issue is one of dominant, rather than exclusive, jurisdiction the relators should have filed a plea in abatement. The district court’s denial of the relators’ plea to the jurisdiction, therefore, did not constitute an abuse of discretion depriving the relators of an adequate appellate remedy. See Abor v. Black, 695 S.W.2d 564, 567 (Tex. 1985). We note that the improper denial of a plea in abatement may, on occasion, warrant mandamus relief. See, e.g., Curtis, 511 S.W.2d at 266–68. Pleas in abatement are incidental rulings, the denial of which ordinarily does not support mandamus relief. See Abor, 695 S.W.2d at 567.2 But when a court issues an “order which actively interferes with the exercise of jurisdiction” by a court possessing dominant jurisdiction, mandamus relief is appropriate. Id.; see Perry v. Del Rio, 66 S.W.3d 239, 258 (Tex. 2001) (granting mandamus relief to direct a district court to move a trial setting so that another court that already exercised jurisdiction over different cases involving nearly identical issues, parties, and witnesses could first consider those cases); Curtis, 511 S.W.2d at 266–68 (granting mandamus relief directing a judge to sustain a plea in abatement in a child custody suit where one court attempted to exercise jurisdiction with respect to the children, despite the fact that dominant jurisdiction had previously been established in another court). Because the Webb County district court did not commit a clear abuse ofdiscretion in denying the relators’ plea to the jurisdiction, any further inquiry into the relators’ appellate remedy is unnecessary. Accordingly, the relators’ petition for writ of mandamus is denied. 

ADDITIONAL LINKS FOR TEXAS SUPREME COURT DECISIONS:

No, the Texas Supreme Court no longer makes law in this venue.

2011 Texas Supreme Court Per Curiam Opinions  
2011 Texas Supreme Court Decisions issued January through June